Redwood City’s real estate market tends to mimic the over San Mateo County market and continues to do so. In 2009, Redwood City’s home inventory was about 20% lower then the spike we saw in 2008. However, this reduction was greatly due to far fewer properties coming on the market then what would typically be considered ‘normal.’ This year we are trending towards a ‘normal’ number of new listings coming to market, this trend is feeding inventory which is not being reduced due to slow sales. If such a pattern continues, prices might remain somewhat stable, but we are still in dangerous territory in regards to a stable market.
In the past few months where we saw average home prices increase, those homes were on average larger and sat on larger lots. Much of the price increases are typically due to luxury properties beginning to sale as jumbo loans have started to reappear.
The reason I caution that this stability is precarious is that in my opinion there are far more catalysts for a downside then upside. Our stock market jut scared the hell out of everyone, many government employees and teachers are about to loose their jobs, interest rates can only increase eventually, State taxes may increase more to get us out of the fiscal mess we’re are in, and even those that can afford more expensive homes are way too nervous to buy up.
When I try to think of reasons to argue that the real estate market can only improve or at least remain stable, I can only scratch my head. The one positive comment I can make is that we survived 2008 and unlike the Stock Market, real estate prices did not rebound as much as the equity markets. Hopefully, this means that the real estate market has found a sustainable support level?
